Against this macro context, Mr. Chu suggested six actions companies could consider:

(1) Companies should reassess where they should compete along the value chain, with consideration for the company’s core value propositions, and thereby the operating model for their globalization strategy.

(2) Companies must consider how to capture value from services. He noted that there is now less economic value-add that is generated by the actual production of goods. Instead, companies should look into the increasing profit pools by delivering service associated to the product and engage customers alongside the total product consumption cycle.

(3) Companies should competitively speed up their delivery of goods to consumers, as e-commerce and disruptors are raising expectation on the service level.

(4) Companies must become agile and flexible enough to swiftly respond to disruptions. In the manufacturing context, one way to do this is to create common platforms across multiple plants.  This reduces the cost of plants, shortens development cycles and speeds up responses to supply chain shocks. 

(5) Companies must build closer supplier relationships. Firms need visibility and collaboration with their key suppliers to help them take advantage of new manufacturing and logistics technologies.  

(6) Companies must build resilience. This can be done through actions such as: dual-sourcing, increasing their inventory of critical products, near-shoring suppliers, regionalisation, SKU rationalisation, increasing safety stock, having back-up production sites, near-shoring production, and increasing DC network density.

Finally, Mr. Chu noted that efforts to adapt to regionalisation will not come without tradeoffs. Companies will be required to make trade-offs in various other important aspects of their operations, such as cost and capital, quality, service, resilience, ESG, labour and talent.